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May 9, 2026What Is an SREC? New Jersey’s Solar Income Program Explained
May 9, 2026Net metering is the program that makes residential solar financially viable for most homeowners. Without it, the economics of going solar would look completely different. I’ve been explaining this to NJ homeowners for 15 years, and the way it works in New Jersey is genuinely one of the best setups in the country. Here’s exactly how it works, what it means for your monthly bill, and what to watch out for as NJ’s policy continues to evolve.
For New Jersey homeowners: You’re in a good spot. NJ offers full retail rate net metering through PSE&G, JCP&L, ACE, and other utilities — meaning every kWh your panels send to the grid earns you the full retail credit. This is meaningfully more generous than most other states, and it’s a key reason why NJ solar payback periods are in the 7–8 year range even after the federal residential tax credit expired.
What Net Metering Actually Is
Here’s the simplest version: your solar panels produce electricity during the day. Your home uses some of it. Whatever your home doesn’t use right now flows out to the neighborhood grid. Your utility meter tracks that export and gives you a credit for it.
At night, or when your panels aren’t producing enough (cloudy days, winter), you pull power back from the grid. Those grid purchases use up the credits you built up during production. If you sized your system right, you end the month — or the year — with a near-zero net bill.
The “net” in net metering is literal: you’re only billed for the net difference between what you consumed and what you produced. In NJ’s full retail rate setup, that credit is worth exactly what you’d pay to buy the same kilowatt-hour. At $0.20/kWh retail, your export credit is $0.20/kWh. That’s the deal.
Why Full Retail Rate Matters So Much
Not every state works this way. California used to offer full retail net metering under NEM 2.0, then switched to NEM 3.0 in 2023 — cutting export credits from around $0.40/kWh down to $0.05–$0.08/kWh. That one policy change stretched solar-only payback in California from 7 years to 11–14 years overnight. NJ homeowners need to appreciate that the setup we have here is genuinely valuable and not guaranteed forever.
Under full retail net metering, you’re essentially using the grid as a free battery. You bank power during sunny hours and withdraw it at night — at no cost to you. That’s worth a lot. If you had to buy a home battery to get the same effect, you’d spend $12,000–$14,000. Net metering gives you that storage function for free.
How Your NJ Electric Bill Changes After Solar
Let me walk you through what a typical month looks like for a PSE&G customer after going solar.
Say your pre-solar bill was $220/month — about 1,000 kWh at $0.22/kWh. You install a 9kW system that in a good summer month produces 1,200 kWh. You use 900 of those kilowatt-hours directly, and export 300 kWh to the grid. Your meter registers a 300 kWh credit at $0.22/kWh — that’s $66 in credits.
That same month, you might pull 100 kWh from the grid at night (when production is zero). At $0.22/kWh, that’s a $22 charge. Your net bill: $22 minus $66 in credits = a credit of $44 that rolls forward to next month. Your bill shows a credit balance, not a charge.
Most NJ homeowners I install for end the year with a $5–$25/month grid connection fee as their only remaining electric bill — just the fixed monthly charge utilities are allowed to keep. The energy portion often comes out close to zero on an annual basis.
Monthly vs. Annual True-Up in NJ
This is where PSE&G, JCP&L, and ACE handle things slightly differently, and it matters for how you think about system sizing.
PSE&G credits roll monthly — unused credits carry forward month to month. At the end of your annual billing cycle, any excess credits are typically paid out at the avoided cost rate (lower than retail) or zeroed out. This varies slightly based on your rate schedule.
JCP&L operates similarly with monthly rollover. The exact end-of-year treatment depends on your enrollment in their net metering program. I always walk through this with homeowners before sizing their system.
ACE (Atlantic City Electric), serving South Jersey, also offers full retail net metering. Same monthly rollover structure.
The practical implication: in summer, your panels overproduce and you stack up credits. In winter, you draw those credits down. NJ’s relatively mild winters mean that a well-sized system can offset most of your annual usage even with shorter winter days. Size for annual usage offset, not month-by-month balance.
How Net Metering Affects System Sizing
With full retail net metering in place, I typically size systems to cover 95–105% of annual kilowatt-hour usage. Here’s why going slightly over makes sense:
The value of a kilowatt-hour you produce and use directly is $0.22. The value of a kilowatt-hour you export and credit back is also $0.22. So there’s no financial penalty to overproducing slightly — you’re earning the same per-kWh either way, right up until your annual true-up resets your balance. Adding more panels to capture that extra summer production pays off at the same rate as your direct consumption.
Compare this to California’s NEM 3.0: exports at $0.06/kWh vs. buying at $0.40/kWh means every kWh you export is worth 85% less than what you’d pay for it. In that environment, adding more panels without adding battery storage makes almost no sense. NJ’s full retail structure avoids that problem entirely.
What Happens at Year-End
In NJ, if you have excess credits at the end of your annual billing period, most utilities either pay them out at the avoided cost rate (roughly $0.05–$0.08/kWh) or carry them forward. Neither option is as valuable as the retail credit you earn mid-year. The takeaway: don’t massively oversize your system with the expectation of “selling” excess power to the grid at retail rates year after year. Right-size for your annual usage and you’ll get the best return.
Net Metering Is Not the Same as the SuSI Program
I need to say this clearly because there’s confusion about it. Net metering and NJ’s SuSI (Successor Solar Incentive) program are two completely separate things running simultaneously.
Net metering is a billing mechanism — it’s how your utility accounts for the power your panels put on the grid and credits your bill accordingly. It shows up as a line item on your monthly electric bill.
The SuSI program generates SREC-II certificates — separate income on top of your bill credits. For every megawatt-hour your panels produce, you earn one SREC-II regardless of whether you consumed that power or exported it. You sell those certificates through a broker to utilities that need them to meet NJ’s renewable energy requirements. They show up as quarterly cash payments, currently at $85 per certificate for residential systems.
As a NJ solar homeowner, you get both. Net metering credits reduce your electric bill to near-zero. SuSI SREC-II income puts cash in your account quarterly. Together they’re the two-part financial engine that makes NJ solar work.
What Could Change Net Metering in NJ
I’ll be honest with you about the risk. Full retail net metering in NJ is a policy choice, not a law of physics. California’s NEM 3.0 is proof that these policies can change significantly — and NJ is not immune to that pressure as solar adoption grows.
The good news: homes that go solar before any policy change are typically grandfathered under the terms that applied when they interconnected. If NJ eventually changes its net metering policy, your existing system would likely continue under the current rules for 20+ years. Going solar now locks in those current terms.
Frequently Asked Questions
What is net metering in New Jersey?
Net metering in NJ is a billing program where your utility credits you at the full retail electricity rate for every kilowatt-hour your solar panels export to the grid. PSE&G, JCP&L, and ACE all offer this. The credit offsets what you buy from the grid at night or on cloudy days, reducing your monthly bill to near-zero for most solar homeowners.
How much money does net metering save NJ homeowners?
For a typical NJ home with a properly sized solar system, net metering eliminates most of the energy charge on your electric bill. A homeowner paying $220/month before solar typically pays $10–$25/month after solar — just the fixed connection fee. That’s roughly $200/month in savings, or $2,400/year, on utility bills alone. Add SuSI income of $1,000–$1,062/year and total annual return on a NJ solar install runs $3,100–$3,500/year.
What happens to excess solar energy under NJ net metering?
Excess production goes to the grid and earns a credit at the retail rate. Credits accumulate month to month. At your annual billing anniversary, any remaining credit balance is typically paid out at a lower avoided-cost rate or zeroed out. The practical advice: size your system to cover your annual usage, not to generate large surpluses that get paid out at a discount.
Is NJ net metering better than other states?
Yes, significantly better than most. NJ’s full retail rate credit compares very favorably to states like California (post-NEM 3.0 export credit: $0.05–$0.08/kWh), where solar-only payback has stretched to 11–14 years. NJ’s combination of net metering plus the SuSI SREC-II program is among the strongest solar incentive packages in the country.
Does net metering work with a battery in NJ?
Yes, though the economics of adding a battery are different when net metering is available. Since NJ credits you at full retail for exports, you can essentially use the grid as a free battery during the day. A home battery makes sense in NJ primarily for backup power during outages — not for financial optimization the way it does in California. If outage backup is important to you, a battery makes complete sense. For pure financial return, solar-only with net metering has the faster payback in NJ.
